Posted!

Join the Conversation

Comments

Welcome to our new and improved comments, which are for subscribers only.
This is a test to see whether we can improve the experience for you.
You do not need a Facebook profile to participate.

You will need to register before adding a comment.
Typed comments will be lost if you are not logged in.

Please be polite.
It's OK to disagree with someone's ideas, but personal attacks, insults, threats, hate speech, advocating violence and other violations can result in a ban.
If you see comments in violation of our community guidelines, please report them.

Reid Health and the city of Richmond have agreed to a preliminary deal that would settle issues surrounding payments for health care received by city employees, according to a joint statement released by the city and Reid on Tuesday.

If approved by the Richmond Board of Public Works and Safety during its regular meeting on Thursday, the agreement would see the city pay Reid $1.3 million to settle pending insurance claims through May 31, according to the news release. The money would come from the city's health care reserves, according to the release.

In 2015, the city of Richmond hired ELAP Services, a Philadelphia-based company that works with insurance plans to reprice bills from hospitals and surgery centers, manage plan assets, make appropriate coverage determinations and manage appeals.

However, ELAP's practice of re-pricing bills ran up against Reid Health's "Fairness in Pricing" policy, which says the hospital will charge the same prices to everyone.

That meant employees were stuck in the middle of the two groups, facing potential legal action for collections on the disputed portion of their health care bills.

“There are so many people that work incredibly hard for this city every day,” Richmond Mayor Dave Snow said in the joint release. “When they need health care, the stress of potential litigation should not be on their minds. This agreement was made to remove that burden and to take a first step in creating a positive health care environment for our employees.”

​While expressing understanding for the city's financial challenges, Reid Health President/CEO Craig Kinyon said in the release, “It is also extremely important for the financial future of our institution that we continue to be good stewards and protect our own financial viability. That means we must be paid for the services we provide.”

According to the release, several months of negotiations between city and Reid officials brought about the preliminary agreement announced Tuesday.

"I'm not going to tell you it's been easy," Sue Roberson, city human resources director, said Tuesday afternoon. "I think the biggest issue has been the stresses that have been put on our employees with the collection agency and the threat of litigation."

Kinyon told the Palladium-Item on Tuesday the hospital began seeking to work with Snow on the issue as soon as Snow took office in January.

"We had a series of discussions and were able to come to a conclusion," Kinyon said.

Snow said he is relieved to have an agreement ready for approval.

"It is our job as the Richmond city administration to manage our administration and that includes our health care," Snow said Tuesday evening. "We are moving away from this state of uncertainty with debt collection and litigation involved and into a state of management."

As soon as the city signs the agreement, Reid will begin adjudicating the individual accounts. "We'll just continue to work with our business office downtown to work with the city human resources department to move along as smoothly as possible," Kinyon said.

He said the hospital doesn't like turning to the courts to resolve payment issues. "That's the last thing we want to do to patients."

However, Kinyon did say the hospital had been through a similar court case before and the hospital believed it had the legal precedent if the issue went to court.

In 2008, a firm offered the hospital payments for procedures and treatment that were well below the bills submitted by Reid, Kinyon said. The hospital filed suit against 10 individual patients. In the end, the insurance companies paid the requested amount, the individuals paid their out-of-pocket expenses and eventually the repricing company stopped the practice.

"We're very pleased that we will not need to do that," Kinyon said.

Settling the issue before Reid filed suit in court also kept the decision-making and negotiations in the hands of the city and Reid, rather than in the hands of a judge, Roberson said. City leaders didn't want employees, who have gone 10 years without a raise, to face being sued, she said.

What they discovered during the discussion process, Roberson said, was that many city employees didn't understand the repricing ELAP offers only applies to facility (hospital) bills, not physician bills.

Further confusion developed when ELAP went to reprice bills and the company had difficulty determining the difference between facility and physician costs because they were all billed under the umbrella of Reid Health, she said. The result was that some physician bills were erroneously being repriced and employees believed they didn't owe the difference.

"Our people were confused," Roberson said.

She said city leaders chose the ELAP plan with input from the unions the city contracts with, but not everyone had a voice in the process.

"Some people would not have chosen that," Roberson said.

The city's settlement payment of $1.3 million will take care of all payment issues between Jan. 1, 2015, and May 31, 2016. The city and Reid also have negotiated an agreement that will cover the next six months.

Under the settlement, Reid only will seek from employees the 20 percent due from the repriced bill, Roberson said.

Roberson explained that if an employee has a $1,000 facility service bill with Reid and ELAP reprices the service at $400, ELAP will tell the employee their payment portion is $80 and Reid will accept that. Under previous conditions, Reid would hold the employee liable for 20 percent of the $1,000 bill and seek payment for the additional $120.

In negotiating with Reid for the second half of the year, the city held out until the hospital agreed that city employees could chose alternative services to the hospital's for imaging (such as MRIs) and lab work, Roberson said.

"We'll educate people and they can choose what they want to do," Roberson said.

The city's payment to Reid of $1.3 million will leave between $750,000 and $900,000 in city's health care reserves, Roberson said.

"It's within our budget, which is why the decision needed to be made now because the city did have the reserve funds that would allow us to do this and hopefully still have some money in reserve," she said.

Snow said on top of the settlement amount, the city will be paying from its reserves additional money to cover employee costs to keep them from ending up in the same debt collection and litigation process.

Roberson said the city's "stop loss aggregate" (or top limit to claim coverage) will have to be adjusted from $5 million to $7 million and will cost the city an additional $375,000 for the last six months of 2016 because the city is taking on more potential liability.

"We will probably pay about $1 million more than we would have with ELAP repricing," she said.

Overall, the settlement and other associated expenses could cost the city about $3 million, Roberson estimated.

The settlement also gives the city six months to explore its health care plan options for 2017.

"Now that this situation is behind us, we'll be talking about 2017 and moving forward," Snow said.

"I don't know what that's going to look like. We've been instructed by the mayor to look at all possibilities," Roberson said. "We can't afford to sign the same contract the school (Richmond Community Schools) and (Wayne) County have now (with Reid)."

Snow said he can't speak to what the county and school plans with Reid include or cost.

"I know that we can manage the current agreement," Snow said. "We'll have to discuss what we can handle moving forward, and I have a responsibility to the employees of this city, the administration and the taxpayers that whatever decision we make is fiscally responsible and creates an environment where health care is affordable, easily accessible and encouraged."

Moving forward, Kinyon said Reid will support any conversations about what the hospital can do to help the city with its health care choices and costs.

"Really, the truth of it is it's not about Reid or the city, it's about the status of health care in this country," Roberson said.